Railways

David Anderson Excerpts

Thursday 25th April 2013 Commons Chamber

[Mr Burns]

Of course not, Mr Deputy Speaker.

[Mr David Anderson (Blaydon) (Lab)]

The Minister wants to rerun the answers.

[Mr Burns]

Cruel.

Before I was so cruelly interrupted by the hon. Gentleman, I was talking about the important issue of safety.

--- Later in debate ---

[Mr Burns]

It is fascinating to hear that from one of Lord Adonis’s colleagues. I suspect that the hon. Gentleman—there seems to be a problem with Luton today—meant that in a derogatory way, but I thought that Lord Adonis was not a Tory, but the last Labour Secretary of State for Transport. I also thought that he was working with the present leader of the Labour party on formulating Labour’s policies.

[Mr Anderson]

Will the Minister give way?

[Mr Burns]

No, I am going to make progress—[Interruption.] I do not want to be disrespectful to the hon. Gentleman, but I have listened to many of his interventions and it is not often that they can be put in the category of making progress—they usually hark back to an era that most of us do not remember.

[Mr Anderson]

rose—

[Mr Burns]

I will make progress in my way, not the hon. Gentleman’s.

The subject of franchising has aroused considerable interest among Labour Members, so let me briefly set out something that I have said before. Since privatisation, rail numbers have doubled and passenger satisfaction is at an all-time high. Recent European research has shown that the countries with the greatest growth in rail travel are those with the most liberalised markets.

As with the proposals I have already discussed, we will need to ensure that we continue to engage on the detail, including by ensuring that any changes to public passenger transport services regulation are compatible with the specific needs of our network and give us the flexibility to deliver a sustainable franchise programme. I know that the Transport Committee’s report is concerned that our arrangements for letting train franchises should not be challenged, and I assure hon. Members that the Government share that view and are looking closely at the issue.

On transport plans, we are concerned that the requirements are over-prescriptive and will therefore impose a significant regulatory burden.

In relation to the channel tunnel, the focus of the Commission’s proposal is on achieving effective competition and further market opening for domestic passenger services, thereby increasing the quantity and improving the quality of passenger services. It is still too early to assess whether this will lead to more cross-border rail services through the channel tunnel.

I will summarise our initial findings on the impacts of the package on the UK. The package may present significant market opportunities for UK firms wishing to expand their operations into the EU. However, the benefits for domestic rail transport are less obvious. We cannot see how a substantial proportion of the additional demand and cost savings identified by the European Commission in its impact assessment will translate to the domestic rail sector in the UK. This is because significant parts of the Commission proposal, including the competitive tendering aspects of the package, are already in place, and because in the UK we already have the benefits of vertical separation which avoids discrimination.

I remain concerned about the Commission moving powers from national safety authorities to the European Railway Agency. The Government will need to be convinced that these powers are necessary, given the high level of co-operation already achieved between national safety authorities. We also do not want anything that interferes with the current UK rail structure or adds bureaucracy and costs, or any proposals that are not compatible with our plans for rail reform.

--- Later in debate ---

[Lilian Greenwood]

My hon. Friend has said exactly what needs to be said on the matter.

The European Commission’s case for extending competition in that way can be found in a recently published non-paper, or document for discussion, on the UK railways. Actually, the term “non-paper” covers it rather well. It implies that privatisation was responsible for improving safety, but in fact the infrastructure sell-off had the opposite effect and subsequent investment in safety was taxpayer-funded. It also claims that privatisation itself was responsible for increasing passenger numbers, but other countries that did not fragment their systems also experienced comparable levels of passenger growth, as the Transport Committee acknowledged this week.

Most remarkably, the non-paper suggests that privatisation has reduced subsidy. At the time, we were promised a more efficient railway, but subsidy rocketed. As the Office of Rail Regulation’s financial report last week confirmed, in 2011-12 train operating companies received more public funding than they paid back. They were paid £51 million more than they gave back in premium payments, while the Government paid almost £4 billion towards the cost of infrastructure.

[Mr Anderson]

Does my hon. Friend agree that the figures show that the subsidy has gone up by 300% since privatisation and, on top of that, fares have gone up by 22% in real terms, so the public are paying for the costs of privatisation? The really perverse thing is that a lot of the subsidy from British taxpayers and fare payers is actually going to the German, Dutch and French national Governments, because they own more than half the railways in this country.

[Lilian Greenwood]

My hon. Friend is right. That is precisely why the Opposition have been prepared to look at reforming the railways.

In total, the train operating companies were left with £305 million before tax at a time when, as my hon. Friend has just said, some fares and season tickets have been allowed to rise by well above the rate of inflation. Those are the headline figures but, as the McNulty report, the Transport Committee and many others have pointed out, there is a basic lack of transparency in railway finances, as commercial confidentiality serves to obscure waste in the system.

The waste is huge. The McNulty report identified an efficiency gap of 40%, compared with the railways of four other European countries. The fragmentation of the industry has led to massive interface costs between Network Rail, the operating companies and the supply chain. Taxpayers and fare payers are supporting replica bureaucracies and unnecessary legal challenges. That money could be better invested in the industry. The great railway sell-off was a botched, rushed job. Labour took action to reverse some of the most damaging legacies of privatisation, including the disaster that was Railtrack, but the Railways Act 1993 was hurried through Parliament for political reasons, creating inefficiencies that are still with us today.